An important new book on improving the stagnant graduation rates of the nation’s public colleges and universities suggests that one reason so many academically talented students leave college without a diploma may be that they enroll in schools for which they are overqualified.

Authors William G. Bowen, Matthew M. Chingos, and Michael S. McPherson propose that counterintuitive idea, which they call “undermatching,” in Crossing the Finish Line, published this month by Princeton University Press. The book’s findings are drawn from a new study of 68 public colleges and universities, including 21 flagship schools, in four states...